KiwiSaver Questions

How is KiwiSaver treated in divorce?

Written by National Capital
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How is KiwiSaver treated in divorce?

In divorce or separation cases in New Zealand, KiwiSaver is treated as "relationship property," which means it must be divided equally between the parties involved, as per the Property (Relationships) Act. However, there are some key points to consider:

What is Relationship Property:
KiwiSaver contributions made during the period when the couple was together, as well as any returns or gains generated from those contributions, are considered "relationship property." This means that only the portion of the KiwiSaver balance linked to contributions and growth made during the relationship is subject to division. Any contributions or returns earned before the relationship began are typically excluded from the division process.

50:50 Split:
The law governing relationship property in New Zealand, as outlined in the Property (Relationships) Act, stipulates that relationship assets, including KiwiSaver, should be divided equally between the separating partners. In essence, this implies that the portion of KiwiSaver deemed as relationship property will be equally shared, with each partner entitled to 50% of those funds. This approach is designed to promote a fair and equitable division of assets.

Agreement for Asset Distribution:
If you and your ex-partner mutually agree on an alternative arrangement for the distribution of assets, you have the option to safeguard your KiwiSaver funds by allocating assets of equal value to your ex-partner. However, it's essential that both parties agree to this alternative arrangement, as such agreements are typically legally binding and must be reached through a consensus.

Consider a Prenuptial Agreement:
To proactively protect your KiwiSaver and other assets before entering a relationship, it is advisable to consider a prenuptial agreement. A prenup is a legal contract that outlines how assets will be divided in the event of separation or divorce. It allows individuals to define the terms of asset distribution, including KiwiSaver, and can be a useful tool to safeguard financial interests.

KiwiSaver Valuation:
The valuation of KiwiSaver for the purpose of division is typically based on the value of the account at the time of separation. This value is typically obtained from the KiwiSaver provider and serves as the standard measure for the division process. Contributions made after the separation date are usually considered separate property and are not included in the valuation. However, if the division occurs a substantial period after the separation, the current value of the KiwiSaver may be used, taking into account any changes in the fund's value.

In summary, KiwiSaver, as relationship property, is subject to division based on contributions made during the relationship, and the division is usually evenly split. However, alternative arrangements can be agreed upon, and prenuptial agreements offer a proactive means of protecting assets. The valuation of KiwiSaver typically relies on the value at the time of separation, with flexibility to use the current value in certain situations. Legal advice and consultation with your KiwiSaver provider are crucial to navigate the complex process of asset division during divorce or separation.

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